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By
Luis F Igniguez
If we divide the world of economics, we can talk
about Two big schools:
 CLASSICAL
 KEYNESIAN
…..NOT
Again!! If we divide the world of economics, we can
talk about Two big schools:
 SCI FI School!
 Realistic…
Sounds prett...
Sci Fi School:
o Classical Model…
o Free-market
o Self-balance
o Invisible hand
o Invisible friends
o Flux capacitors
o La...
Reality
 Classical Model Again!
 SCARCITY
 Recessions
 Keynesian economics
 Unemployment
 AD, Gov. Spending,
 etc…
 Either Classic or Keynesian we would agree that
everybody (every country) is toward its
economic growth.
 Despite the contrasts betwen Classical and
Keynesian:
 The consumption is the factor that must be
present always in order to boost any economy.
 It is simple: without consump...
 The more we produce, the more we tend to
consume.
 It is not a coincidence that the economic powers
in the world have t...
 Production, income, and consumption might have
different ratio, but if one’ slope is positive, then
another is positive ...
 So we produce effitiently more and more! Here
we go!! we can consume more!
But while consumption increases there is one
factor we forcefully forego.
• The consumption efficiency
Last year you made $20 a week
o From time to time you used to buy 2 yogurts.
o None of your yogurts ever spoiled because:
...
o Now you make $70 a week, a lot more ca$h
o From time to time you buy 10 yogurth. Maybe
you consume more yogurth, maybe t...
NOW ONE YOGURT SPOILED!!!!!!
…Well it’s not that bad, because:
 It was only 1 out of 10 yogurth, not like you
wasted half of the money you expended on...
 We will see this pattern of loss in most of individuals.
 Maybe your loss ratio will be smaller, but at some
point when...
But the thing gets more interesting when you observe this
happening not only on individuals:
 Corporations
 Goverments
...
They all will waste yogurt at some point.
 Paper
 Ink
 Fuel
 Dolphins
 etc
 High volumes of
production focus us on
the factors of
production, rather than
consumption, as long
as this inefficient
c...
 The higher the
consumption amount
is, the harder to get
control of its
effectiveness or
efficientcy is.
 As
consumers, producers,
individuals: we just
have too many reasons
to let our consumption
efficiecy decrease as
we go “...
I was told about some guys that would probably
support me….
 …Unfortunatelly they’re all dead
 Oops this last one’s aliv...
Ronald H. Coase – Transaction costs
He stated how organizing additional
transactions will raise costs….
That would explain...
Семён Абрамович Кузнец
Simon Smith Kuznets
The Kuznets Curve
 He would defenitely believe!...
The Kuznets Curve
 He observed how the enviorement is degradated while an economy
grows.
 But there is one turning point...
The Kuznets Curve
 But we can tell that this
turning point is not present in
all cases.
 If we look at the oil
market, t...
The following dude noticed
something very important and
I am pretty sure he would
totally believe!
 William Stanley Jevon...
The Jevons Paradox
 It explains how technology improvement will
raise the demand of fuel instead of decreasing it
as we w...
The Jevons Paradox
 For example: we get better engines, much more
efficient… but more and more people buy cars
using thes...
A very simplistic representation could be modeled
by a negative exponential function where:
Where CE is the Consumption e...
 For example (89-75)*(0.8)^x+75
 Our peak of efficiency will be 89%, we can’t be
more efficient in this example.
 The e...
 Scarcity is the fundamental economic problem of
having humans who have wants and needs in a
world of limited resources. ...
This paradox will lead us to two possible ends:
Again…
Realistic
SCI FI!
….Where…..
Realistic:
eventual wars pursuing control for scarce basic
elements
Apocalypse!!!
..or SCI FI can come true:
 Amazing inventions will solve scarce
problem, such as:
Flux Capacitors!
Mr. Fusion
If you w...
Looey's Consumption Inefficiency Theory
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Looey's Consumption Inefficiency Theory

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A quick project about inefficiency in human consumption. Economics these days.Although it looks funnier with the animations on the slides, anyway. Enjoy

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Looey's Consumption Inefficiency Theory

  1. 1. By Luis F Igniguez
  2. 2. If we divide the world of economics, we can talk about Two big schools:  CLASSICAL  KEYNESIAN …..NOT
  3. 3. Again!! If we divide the world of economics, we can talk about Two big schools:  SCI FI School!  Realistic… Sounds pretty much economics to me…
  4. 4. Sci Fi School: o Classical Model… o Free-market o Self-balance o Invisible hand o Invisible friends o Flux capacitors o Laser sabers… o Perfect competition
  5. 5. Reality  Classical Model Again!  SCARCITY  Recessions  Keynesian economics  Unemployment  AD, Gov. Spending,  etc…
  6. 6.  Either Classic or Keynesian we would agree that everybody (every country) is toward its economic growth.
  7. 7.  Despite the contrasts betwen Classical and Keynesian:
  8. 8.  The consumption is the factor that must be present always in order to boost any economy.  It is simple: without consumption, production is pointless.  Therefore we tend to consumism (if you get the misspelled meaning)s in a macro perspective.
  9. 9.  The more we produce, the more we tend to consume.  It is not a coincidence that the economic powers in the world have the biggest consumption ratio.  Developing economies with a high growth ratio increase consumption ratio as well.
  10. 10.  Production, income, and consumption might have different ratio, but if one’ slope is positive, then another is positive too.
  11. 11.  So we produce effitiently more and more! Here we go!! we can consume more!
  12. 12. But while consumption increases there is one factor we forcefully forego. • The consumption efficiency
  13. 13. Last year you made $20 a week o From time to time you used to buy 2 yogurts. o None of your yogurts ever spoiled because: 1. It was the exactly amount of yogurt you needed 2. You could not afford more yogurt, and so you did not let it spoil because it was your concern.
  14. 14. o Now you make $70 a week, a lot more ca$h o From time to time you buy 10 yogurth. Maybe you consume more yogurth, maybe the same amount and do not go to grocery store that often, but…
  15. 15. NOW ONE YOGURT SPOILED!!!!!!
  16. 16. …Well it’s not that bad, because:  It was only 1 out of 10 yogurth, not like you wasted half of the money you expended on them  Now you produce more, so you can afford buying another extra yogurth  You did increase your productivity, but now you consume less efficiently
  17. 17.  We will see this pattern of loss in most of individuals.  Maybe your loss ratio will be smaller, but at some point when your wage raises, you will waste a yogurth.
  18. 18. But the thing gets more interesting when you observe this happening not only on individuals:  Corporations  Goverments  Evil babies
  19. 19. They all will waste yogurt at some point.  Paper  Ink  Fuel  Dolphins  etc
  20. 20.  High volumes of production focus us on the factors of production, rather than consumption, as long as this inefficient consumption does not decrease our production output significantly
  21. 21.  The higher the consumption amount is, the harder to get control of its effectiveness or efficientcy is.
  22. 22.  As consumers, producers, individuals: we just have too many reasons to let our consumption efficiecy decrease as we go “bigger”  What!?? I need some help!
  23. 23. I was told about some guys that would probably support me….  …Unfortunatelly they’re all dead  Oops this last one’s alive!
  24. 24. Ronald H. Coase – Transaction costs He stated how organizing additional transactions will raise costs…. That would explain a lot of the Significant reasons why we are not as efficient as we can while we consume. Once again, Opportunity costs…
  25. 25. Семён Абрамович Кузнец Simon Smith Kuznets The Kuznets Curve  He would defenitely believe!...
  26. 26. The Kuznets Curve  He observed how the enviorement is degradated while an economy grows.  But there is one turning point where the degradation decreases and after the industrial period, things would get better.
  27. 27. The Kuznets Curve  But we can tell that this turning point is not present in all cases.  If we look at the oil market, there was never a turning point for its exploitation….  And Speaking about oil (sorry about this microeconomics intermission) I will get some more help on the next slide….
  28. 28. The following dude noticed something very important and I am pretty sure he would totally believe!  William Stanley Jevons  The Jevons Paradox
  29. 29. The Jevons Paradox  It explains how technology improvement will raise the demand of fuel instead of decreasing it as we would have expected…
  30. 30. The Jevons Paradox  For example: we get better engines, much more efficient… but more and more people buy cars using these engines… and speaking about paradox..
  31. 31. A very simplistic representation could be modeled by a negative exponential function where: Where CE is the Consumption efficiency f(x) being x the productivity unit (say income, GDP etc),  P is the efficiency peak  r is the decreasing ratio where 0<r<1  B is the inefficiency bottom
  32. 32.  For example (89-75)*(0.8)^x+75  Our peak of efficiency will be 89%, we can’t be more efficient in this example.  The efficiency bottom is 25% we can only afford less than 25% of inefficiency.  A lot of assumptions….
  33. 33.  Scarcity is the fundamental economic problem of having humans who have wants and needs in a world of limited resources. It states that society has insufficient productive resources to fulfill all human wants and needs.  But the current and real economic behavor leaves out the scarcity problem while we consume.
  34. 34. This paradox will lead us to two possible ends: Again… Realistic SCI FI!
  35. 35. ….Where….. Realistic: eventual wars pursuing control for scarce basic elements Apocalypse!!!
  36. 36. ..or SCI FI can come true:  Amazing inventions will solve scarce problem, such as: Flux Capacitors! Mr. Fusion If you watched part I ( you should have) You would know that The doc needed uranium as fuel…

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